March 2016

Happy Saint Patrick’s Day! It seems like reporters go out of their way to find the craziest people to put on camera for a story. It certainly seems to be the case in the financial entertainment community where you can find perma-bear hucksters given the same regard as respected economists and CEOs. When I see one of these jokers on CNBC I think of this video: I lump people calling for an audit of the Fed, urging a hand-count of gold ETF bullion holdings, and gold salesmen on AM radio in the “I want to know where the gold at” camp. Then there are the chartists who show a Hindenburg Omen or a Death Cross or a chart with labels on three axes or an overlap of today’s market over a chart of 1929 or 1987. These are the amateur sketch artists of CNBC. Contributors like Josh Brown do their…

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Fear is an investor’s constant companion. We are supposed to be greedy when others are fearful and fearful when others are greedy. However, fear seems to loom largest when the markets are down and fades away when markets are up. Pain of past losses gives birth to new fears that what happened in the past will happen again. While fear was helpful to our ancient ancestors, it is less helpful in investing. One of the most insidious fears is fear of missing out – sometimes abbreviated as FOMO. Fear of missing out is why everybody and their brother threw money at any stock with ‘.com’ in their name in 2000. Fear of missing out is why your brother-in-law suddenly got into the house-flipping game in 2007. Fear of missing out tells us that this is a once in a lifetime opportunity and if we get in on the ground floor, we…

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Yesterday marked the anniversary of the market’s lowest point during the financial crisis, the birth of our current bull market. A quick recap: From its previous peak on 10/10/2007, the S&P 500 dropped 55% through 3/9/2009. From 3/9/2009, the S&P 500 gained 237% (almost 19% annualized), including dividends through 3/9/2016. Today, there are plenty of people on TV who “called” the peak before the financial crisis. They never tire of patting themselves on the back, saying it was clear to them that there was a bubble and obvious that we were on a road to ruin. This is bullshit, of course. The wizards on TV who “warned you all” are largely perma-bears who predict a new stock market crash every year, a case of a stopped clock being right twice every day. Some of them pull out data like the CAPE ratio, saying it showed an extremely…